[whats_a_quasar]

The solar city acquisition was for "only" $2.6 billion. This deal is way bigger. I'm not sure what the Tesla valuation was at the time of that deal, but I have to imagine it's proportionally way bigger too. A $45 billion acquisition when the acquirer, xAI, has an $80 billion valuation will threaten the integrity of xAI. Particularly because that's just a paper valuation and xAI doesn't have much of any revenue.

If I were an investor in xAI I would be furious about this. They're almost certainly overpaying for Twitter and there's definitely going to be litigation.

Edit: It sounds like the combined entity is taking on Twitter's $12 billion of debt from when it originally went private. As of last December xAI had raised "more than $12 billion" in total [1], so the deal attaches Twitter's debt to that ~12 billion pot of VC money. Unless I'm really misunderstanding something this deal looks like a bailout of Twitter and a huge new liability for xAI.

It's definitely possible my hot take is wrong and the xAI investors support the transaction. I hope so because if not there's going to be some brutal lawsuits over this.

[1] https://www.nytimes.com/2024/12/24/technology/elon-musk-xai-...

[TheAlchemist]

Just keep in mind this is all funny money !

The valuation of those 2 companies combined should be < $10 billions if we are very very generous.

X is heavily in debt, diminishing user base, and bleeding money. 0 profits

xAI is yet to make any actual revenues outside of ... X. Also bleeding money

Although I would admit, that these companies are not valued based by their economics, but rather on political power they provide to the owner.

[whats_a_quasar]

As best I can tell the deal includes paying off $12 billion of Twitter debt. So that's real money, though that seems like it's basically all of the cash that xAI has raised, so if that's the case that's pretty wild.

Edit: I misread, Musk said it's an all-stock deal, so you're right, it's all funny money. I think that means the combined entity is taking on that debt. It's still great for Twitter and bad for xAI investors because the combined entity now has both the $12 billion debt and all the VC xAI raised.

[chatmasta]

This doesn’t strike me as an objective assessment of the state of affairs.

You could make the same “bleeding money” comment about many historical social media acquisitions – at least Twitter has advertising and subscription revenue. And it’s similarly suspect to argue that xAI is failing due to lack of revenue, without mentioning the astronomical valuations of its peers in the AI space, many of which are not only lacking revenue but also have no distribution channel comparable to the scale of Twitter/X.

xAI has one of the leading models in terms of investment and user base, and it’s rapidly improving on its evaluation metrics.

Twitter/X is one of the Top 10, if not Top 5, social media properties worldwide. It has hundreds of millions of monthly active users and maintains the lead in public consciousness as the “go to” place for 1-N broadcasting of information. While Bluesky shows promise, it won’t be dethroning Twitter any time soon. When has Bluesky been the source of breaking news?

And you cannot separate these two businesses. Twitter/X and X.ai are fundamentally coupled to one another. Twitter is not only a data source for X.ai but also a distribution and retention channel. There is an “ask Grok” button under every Tweet. And it’s not the only LLM that can be summoned via Tweet – with similar automations from companies like Perplexity proving there is value in the channel – but it is the only LLM with a native integration into the interface and first dibs on freshly-generated user content and breaking news.

[dzhiurgis]

I’m guessing Tesla is paying xAI to train their FSD model?

[ekianjo]

> diminishing user base

Where are you getting this from? All numbers I see indicate the user base has been growing globally. https://backlinko.com/twitter-users

[michaelwilson]

Wait, wasn't there a "sweetener" for recent X debt buyers that they'd get XAI stock?

The levels of .. self-fertilizing transactions here boggles the mind. I guess that's the idea.

[1024core]

> and xAI doesn't have much of any revenue or assets.

xAI does have some pretty massive datacenters with 200K+ GPUs.

[whats_a_quasar]

Fair enough, edited to just revenue. But those are just datacenters bought with VC money - my intent was to say that xAI's resources are basically just the investment they've received.

[knowriju]

xAI is a private company. I very much doubt that the current VC investors will ever litigate this. They are all waiting for some other favour for taking this on either explicitly or implicitly. Also, I would like to see a Venn diagram of the investors in xAI and SpaceX.

[samr71]

They're gonna go public and the market cap will be at ~$300B within a year or two